Staten Island Foreclosur​es Increase Slightly in March, But Maintain Longer Term Downtrend

Despite another month-over-month uptick,foreclosures continue to decline on an annual basis and, according to a report from CoreLogic today, are now down 52 percent from the peak in 2010. The company’s National foreclosure Report for March showed that foreclosures increased 6.2 percent from February to March 2013 but the March activity was 15.8 percent below that of one year earlier.

Fifty-five thousand foreclosures were completed in March compared to 52,000 in February and 66,000 in March 2012. By way of comparison, during the pre-recession years of 2000 to 2006 foreclosures averaged 21,000 per month on a national basis. Since the foreclosure crisis began in the fall of 2008 there have been approximately 4.2 million foreclosures and there were 735,000 over the 12 month period ending in March.

The states with the highest number of foreclosures over that 12 month period were Florida (103,000), California(83,000) and Michigan (70,000). However when foreclosures are viewed in the context of the number of outstanding mortgages Michigan led the nation with one completed foreclosure in the past 12 months for every 19 mortgages followed by Arizona with one in 27 and Florida at one in 28. The national average was one in 55 mortgages.

The foreclosure inventory – the number of homes in some stage of foreclosure, currently stands at around 1.1 million homes, down 23 percent from the 1.5 million homes in foreclosure in March 2012 and a 1.9 percent monthly decline. This inventory represents 2.8 percent of all mortgaged homes in the U.S. compared to 3.5 percent in February 2012 (sic). This was the 17th consecutive month when the inventory declined on an annual basis.

Florida leads the states with nearly 9.7 percent of its homes in some state of foreclosure followed at a distance by New Jersey (7.3 percent) and New York (5.0). Of the ten states with the highest percentage of homes in foreclosure all but two, Nevada and Rhode Island, are states using the judicial foreclosure process. The lowest foreclosure inventories by percent are all in sparsely populated states – Wyoming (0.5 percent), Alaska(0.7 percent), and North Dakota (0.7 percent).

The inventory has declined in 46 states with some of the most troubled states, Florida, New York, New Jersey, Illinois, and Nevada, experiencing the largest decreases, all in excess of 6 percent.

Anand Naliathambi, president and CEO of CoreLogic said, “For 17 consecutive months, foreclosures have declined year over year across the U.S. Although we still have more than a million homes in some stage of foreclosure, this trend, combined with rising home prices, is another signal of a gradually improving housing market.”

For more information visit http://www.mortgagessiny.com

Staten Island Real Estate Mortgage RateS Officially hit New 2013 Lows

Mortgage rates finally made a break from their recent flat and sideways pattern, moving officially to the best levels of 2013 by a small margin (this may vary slightly depending on the lender). The day-over-day improvement isn’t out of line with average fluctuations in rates, but against the backdrop of the past two weeks, it stands out. Most lenders have been competitively priced between 3.25-3.5% on 30yr Fixed, Conventional loans. While the best execution rate has been 3.5% with 3.375% looming, today’s improvements probably tip the scales in favor of 3.375% for some scenarios. Lower rates are available at most lenders and the costs associated with moving lower from 3.375% may make sense for some borrowers.

Since hitting their highest levels in more than 10 months last month, rates have improved or held steady–for the most part–for the past 7 weeks! With that being the case, and with today being the best day of that entire 7 week stretch, it’s impossible to argue to allure of locking a rate. That said, there are a few considerations ahead. Monday and Tuesday of next week will be the last two days of the month–a time when the bond markets that underlie mortgage rates can experience a slight boost from money managers buying bonds to balance portfolios for month-end. This doesn’t guarantee lower rates, but it’s a net positive if all other things are equal. Then the big-ticket events start hitting on Wednesday and keep going strong through Friday’s Employment Situation Report. These three days will almost certainly decide if rates will bottom out at current levels for a while or if we will extend back to the range from mid-November or late September.

Loan Originator Perspectives

“Rates look good. Floating is probably safe for the weekend, but be ready to lock next week. Can’t fall asleep at the wheel. ” -Mike Owens, Partner, Horizon Financial Inc.

“For 2nd Friday in a row, MBS market closing near best levels of the week. Looks like economic news is starting to trump optimism, with weak GDP and consumer sentiment numbers providing MBS support. I may lock some loans this weekend if pricing is what we need, but look forward to great rates next week as well!” -Ted Rood, Senior Originator, Wintrust Mortgage

“Nice improvements with MBS today but not seeing all the gains passed along on rate sheets. If your pricing has improved .375 from yesterday and within 15 days of funding, i would lock. Floating everything else over weekend.” -Victor Burek, Open Mortgage.

“I keep waiting for something, anything, to move the needle. Despite all kinds of positive and negative news, we seem to be treading water rate wise and are trading in a very narrow range. That leads me to believe that the market is waiting for some type of confirmation, and as it happens the 800lb. gorilla for reports – Non Farm Payrolls – will be released a week from today. Do you feel lucky? If the thought of your interest rate and/or your loan costs increasing makes you nervous, you will need to make a decision quickly in order to avoid that potential volatility.” -Brett Boyke, Senior Mortgage Associate, First Centennial Mortgage

“Three Fridays ago on April 5, a weak March jobs report (88k nonfarm jobs created vs. estimates of 190k) sent rates lower, and they’ve held lower levels since. Today’s weak 1Q2013 GDP report (2.5% vs. estimates of 3%) has caused MBS to break higher, which has caused rates to improve yet again. We’re now at lows of the year and within striking distance of record lows. Great locking opportunities for home buyers and refinancers to end the week, and to head into a Spring home buying weekend.” -Julian Hebron, Branch Manager, RPM Mortgage

Today’s Best-Execution Rates
•30YR FIXED – 3.5%

•FHA/VA – 3.25% (varies more between lenders than conventional 30yr Fixed)
•15 YEAR FIXED – 2.75-2.875%

•5 YEAR ARMS – 2.625-3.25% depending on the lender

For more information visit http://www.mortgagessiny.com

Lowest Mortgage Rates on Staten Island Presents, “The Week Ahead”

Two Mondays ago, bond markets bounced at the exact same levels that followed the weak Jobs report on April 5th. It became increasingly clear through the course of that week (4/15-4/19) that we were entering into some manner of sideways slide–not eager to extend already solid recent improvements, but clearly also not eager to head back into March’s trading range. To whatever extent that “sideways-ness” was clear, it was always stood it’s best chance to be broken by the current week of data and events. The following chart presents two ways to view the recent range in 10yr Treasuries: purely flat with a few “lead-offs” or slightly bullish tilted (teal lines).

There’s significant economic data every day this week and several potential watershed moments. The big-ticket events start hitting on Wednesday with ADP Payrolls (only inasmuch as it has the potential to suggest reevaluating expectations for the official Employment Situation Report on Friday–the biggest ticket of the week). ISM Non-Manufacturing data follows later that morning, but is outdone by 2pm’s release of the Fed’s latest policy announcement. This is the shorter, more precise text used to officially communicate the current policy (as opposed to FOMC “Minutes” which are longer, less formal, and slightly more open to interpretation). Unlike the last FOMC Announcement, this one is not accompanied by forecasts from FOMC Members or the press conference from the chairperson. Unless it differs meaningfully from the previous iteration, there’s a good chance it won’t have much impact, but the impact can be significant if it makes an overt change or a less-than-subtle hint that one is coming.

The pace of events doesn’t let up on Thursday as the European Central Bank (ECB) is out with their analogous policy announcement. A majority of economists polled by Reuters believe the ECB will cut rates for the first time in nearly a year. It’s not a given that this will happen, nor that it would be by the 0.50% amount predicted. The divergent possibilities leave the door open for more volatility in bond markets following the announcement. At the same time that ECB President Draghi begins his Press Conference 45 minutes after the announcement, so too will US Economic data begin coming in for the day with Jobless Claims as well as Productivity and Costs.

Friday morning remains the focal point of the week with Non-Farm Payrolls at 8:30am, though markets will have had plenty of opportunity to move even before then. Take the last instance of an NFP week for example (it’s on the chart above too!). 10yr yields began breaking below that 1.823% line on Wednesday and extended gains on Thursday only to have Friday’s job’s report motivate the biggest gains of the week. That was a classic example of a pre-NFP “lead-off,” and such things are especially possible when the rest of the week is fraught with other meaningful data.

For more information visit http://www.mortgagessiny.com

Staten Island Realtor Q & A

Q. My husband and I are separated. Our children are grown, and I’ve been living alone in our big family home. Since I don’t have a lot of cash or time to spare, I have not been able to keep it up very well. Now I’d like to sell it, but I know that it isn’t worth as much as other homes nearby because of the maintenance problems. I think I should get an appraisal and home inspection before I put it on the market, but my friends say that’s a waste of money. What do you think?

–McLean, Va.

A. I think your friends are partly right. Getting an appraisal is a waste of money since you don’t need it to list your home. There are many other free ways to get a general sense of what your house is worth, including various web-based automated home-price estimators that rely on recent sales. You should study the pictures of these sold homes to see how well-kept they were compared with yours.

Real-estate agents who have sold properties in your area are another good source of information on home prices. Invite at least three of them to prepare competitive market analyses and to visit your home. Ask them to be brutally honest about what needs to be fixed, and to estimate the cost of repairs. To keep from hurting your feelings and losing the listing, some agents may say that they leave those suggestions to their stager. I’d eliminate those agents. Since you are operating on a tight budget, it’s best to hire someone who won’t sugarcoat the truth or suggest that you price your home too high, given its issues. Such flattery may win the listing but won’t be in your best interests. The longer your house sits on the market, the more it will lose its luster in the eyes of home shoppers, while you’re still on the hook for the mortgage, utilities and other expenses.

A home inspection is also unnecessary for a seller, but something you might want to consider if you don’t have a good handle on what needs to be repaired. Typically, the inspector will uncover many items that you can easily fix yourself, like a broken window latch or a clogged bathroom drain. You may not be able to fix everything on the deferred maintenance list, but you’ll net much more if you can pare it down before the buyers’ home inspector arrives. The buyers will insist that any repairs their inspector finds be fixed by a professional, or will ask for a credit at closing to have the repairs done themselves.

Spend any money you were planning to spend on an appraisal on contractors to make the most important fixes. And don’t forget the eye candy: If you can’t afford to have painters do your whole house, just have them freshen the rooms that get the hardest wear (usually the kitchen and baths), as well as the front door.

For more information visit http://www.mortgagessiny.com

Staten Island Low Mortgage Rates should stay that way , read below

Another lackluster quarter of economic growth is likely to have the same impact on the market as its predecessors—which is to say, not much.

Despite a prolonged period of weak improvement in gross domestic product, stocks have continued on a progressive, albeit bumpy, ride higher.

The 136 percent stock market surge over the past four years has come despite the weakest recovery since the Great Depression, and more recently signs that those expecting a period of stronger growth will be disappointed.

No matter, though, as investor—riding a wave of Federal Reserve liquidity and sentiment that the U.S. remains a safer store of money than its troubled global competitors—keep buying despite the slow economy.

For more information visit http://www.mortgagessiny.com

Staten Island Mortgage Rates Almost Perfectly Flat For Eight Consecutiv​e Days

Mortgage Rates Almost Perfectly Flat For Eight Consecutive Days

Mortgage rates were microscopically higher today, doing very little to change the pervasive theme of narrow, sideways movement this week. In fact, today’s rates are almost perfectly comparable to those seen on 4/15 and have moved less during those 8 business days than any 8-day stretch we have on record. Best execution for Conventional, 30yr Fixed loans remains at 3.5% with the most aggressive lenders close to 3.375%. Lower rates are available at most lenders for an additional cost and may be viable depending on your scenario.

Not only have mortgage rates been sideways and stable, but related Treasury yields have held similarly narrow ranges with 10yr notes holding mostly between 1.69 and 1.72 during the same time. Such periods of consolidation are typically followed by a more concerted move higher or lower, and markets are likely looking toward next week’s slate of important events and data for guidance. It’s also not uncommon for rates to start moving even before the important data arrives, in the same way a runner might take a “lead off” in baseball. We have yet to see such a lead-off, and tomorrow’s GDP and Consumer Sentiment data will be this week’s last chance.

Loan Originator Perspectives

“Mortgage rates have settled in to a very stable area of late. The good news is this area is very near all time lows. We tend to lean toward locking to take advantage of these rates as we view the risk of rising rates to be much more likely than falling rates.” -Alan Craft, Acopia Home Loans

“Stability reigns again today in MBS market as a successful 7 year auction confirmed investor demand for treasuries. Locked on this AM, same pricing as yesterday. Seeing 15 year rates as low as 2.5%…..talk about cheap money!” -Ted Rood, Senior Originator, Wintrust Mortgage

“Not much volatility lately with interest rates as of yet. Even today’s better than expected jobless claims couldn’t push rates higher. I continue to advise my clients to float until you are within 15 days of funding.” -Victor Burek, Open Mortgage.

“It certainly feels like a broken record, but the sideways trading has really been a huge benefit in managing locks. More specifically, when the bond market settles into a tight range it makes it easier to be decisive. Our position has not changed, if closing within 10-15 days you should not speculate, even 21-30 days should strongly consider locking at these levels.” -Constantine Floropoulos, Quontic Bank

“Today we saw Jobless claims beat the forecast, but not by enough to make any major shifts within the current pricing range. All eyes will now be on next week’s NFP report as the next potential market mover after March’s major disappointing read. Any opportunity to lock within 30 days should be strongly considered. ” -Justin Dudek, Supreme Lending

“Sticking with a locking bias this week because MBS are having trouble rallying past current levels. This and the fact that we’re just .125% above record lows after spending most of this year .375% above record lows. Next week has more high risk events, so the safe play short term is locking.” -Julian Hebron, Branch Manager, RPM Mortgage

Today’s Best-Execution Rates
•30YR FIXED – 3.5%

•FHA/VA – 3.25% (varies more between lenders than conventional 30yr Fixed)
•15 YEAR FIXED – 2.75-2.875%

•5 YEAR ARMS – 2.625-3.25% depending on the lender

Ongoing Lock/Float Considerations
•After rising consistently from all-time lows in September and October 2012, rates are challenging the long term trend higher
•Some level of panic over the European situation has returned, to the benefit of domestic interest rates.
•Domestic economic weakness has played a role in helping balance the outlook for Fed bond-buying.
• We’re at a crossroads where we’ll soon see if the “rising rate environment” remains intact or is successfully challenged.
•(As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario. There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

For more information visit http://www.mortgagessiny.com

Lowest Mortgage Rates on Staten Island Depend in part on the Next Debt Limit

The next battle over the debt limit appears to be farther away than many expect – and perhaps not until well into autumn.
Higher tax revenues, less spending and a potential massive inflow of money from the recovery of the taxpayer-owned mortgage finance companies Fannie Mae and Freddie Mac mean that the federal government may have to borrow less than anticipated in coming months, analysts say.

And that would mean there’s more time for President Obama and Congress to come up with an agreement to raise the $16.4 trillion debt ceiling.

Earlier this year, Congress agreed to suspend the debt limit through May 18 – and raise it on that date to account for any borrowing done in the meantime. But once the debt limit is back in place, Congress will have to raise it to accommodate additional borrowing needed to fund the government on an ongoing basis.

The Treasury Department can use several accounting measures to delay the date by which Congress has to raise the debt. Those measures typically buy two to three months of time. The Treasury hasn’t said precisely how long.

While there has always been a bit of politicking around the debt limit, it has become far more polarizing in recent years. In summer 2011, Republicans demanded deep spending cuts in exchange for raising the debt limit. Negotiations between GOP leaders and the White House dragged on, bringing the country within a few days of breaching the debt limit. If that had happened, the Obama administration said, it would mean that an unprecedented default on the national debt would be imminent.

Republicans agreed to delay the debt limit debate in the fall and haven’t yet indicated what they will do the next time around. Obama has pledged not to negotiate over the debt limit.

Earlier this year, the Bipartisan Policy Center, which has conducted accurate debt limit forecasts in the past, estimated that Treasury could probably use its accounting techniques – which are called “extraordinary measures” – to delay the ultimate deadline until sometime in August.

But now, it is increasingly likely that Congress will have until September or October to raise the debt limit, according to Steve Bell, senior director of the Bipartisan Policy Center.

A precise forecast isn’t possible at this time, Bell said, but “most of the forces are pushing the date a little later.”

A number of factors are at play. Tax revenues this year having been coming in at a higher level than many expected – the result of a stronger economic recovery and a range of tax hikes taking effect at the beginning of the year.

What’s more, the deep spending cuts known as sequestration mean that levels of domestic and defense spending are starting to come down swiftly. That reduces Treasury’s need to borrow.

And then there is an another unexpected wild card: the government-backed mortgage finance giants Fannie Mae and Freddie Mac.

In the midst of the financial crisis, taxpayers bailed out Fannie and Freddie. But under the bailout agreement, taxpayers have a right to seize all of the companies’ profits. And with the recovery of the housing market, that’s been billions of dollars.

Soon, the companies could release tens of billions of dollars to taxpayers. That’s because they were forced to reduce the value of special tax assets worth close to $100 billion during the financial crisis. But with the recovery of the market, the assets are likely to gain back their value soon.

Because of accounting rules, Fannie and Freddie would be forced to recognize the increase in value as profit – and turn it over to taxpayers. Fannie has suggested this might occur this spring – and said it could turn over around $60 billion. Freddie appears to be behind in the process.

“Treasury could reap a much larger windfall if [Fannie and Freddie] release valuation allowances for deferred tax assets,” analysts at Stone McCarthy Research said in a recent research report. “If that occurred at the end of June, the extra cash could help Treasury navigate any debt limit crisis this summer.”

“Any additional cash will make navigating the next debt limit crisis, ­­ if there is one, ­­ that much easier,” the analysts added.

The debt limit is likely to automatically jump to $16.8 trillion May 18. Borrowing needs vary from month to month, but may be extended later into the fall because September is a month when the Treasury receives a large amount of tax revenue due to quarterly filings.

For more information visit http://www.mortgagessiny.com

Mortgages On Staten Island Affected by Global News

MBS and Treasuries moved into weaker territory immediately following the release of this morning’s lower-than-expected Jobless Claims figures, but have since bounced back moderately. Fannie 3.0’s are currently down 1 tick on the day at 104-07, off 2 ticks from the pre-claims highs. 10yr yields are up 1.5bps on the day at 1.718 after trading just under 1.71 before the data and hitting 1.725 at their worst.

Jobless Claims has proven to be the only significant source of inspiration this morning as overnight markets were generally calm. This was the expectation owing to a lack of data and events where the only standouts include UK GDP turning positive, Spanish Unemployment hitting a record 27.2%, and Italy being expected to form a government in the next few days.

All of that SOUNDS like big news, but markets haven’t treated it as such. Reasons being: UK GDP and Spanish unemployment were both fairly close to the consensus. As far as Italy is concerned, markets have been gradually pricing in a similar scenario for weeks (ESPECIALLY this week when Napolitano was reelected, a new Prime Minister was named, and Italian credit spreads returned to pre-February Election levels, all before today’s session). Bottom line: none of “that stuff” was a big surprise for markets.

With the only significant domestic data out of the way, MBS and Treasuries are left at the whim of trade flows, technicals, and potential stock lever connection. To that end, cash equities open in about 10 minutes. In the afternoon, the last of the week’s Treasury Auctions arrives in the form of 7yr Notes at 1pm. In and of themselves, they’re not usually a big mover, but there can be some collective “relief” with the completion of the overall auction cycle. We’re not expecting much in that regard, but it could be slightly beneficial if the auction results are close to average.

For more information visit http://www.mortgagessiny.com

Staten Island New Homes But at WHAT COST?

Even as U.S. housing rebounds from its worst downturn since the 1930s, production bottlenecks are pushing up building-materials costs, land prices are rising and skilled labor ready to begin work is hard to find.

Suppliers of glass, drywall and wood products, who reduced output during the slump, are testing the vigor of the rebound by boosting prices before committing to restore capacity. Builders, including Lennar Corp. (LEN), Toll Brothers Inc. (TOL) and KB Home, are asking homebuyers for more money as a result or are delaying sales, posing a temporary hurdle for the industry that has become one of the pillars of the economic expansion.

Building-material manufacturers “are raising prices dramatically, and once they’re convinced that these prices are going to stick, they’ll start reinvesting in those plants,” helping ease supply constraints, said John Burns, chairman of Irvine, California-based John Burns Real Estate Consulting, which provides research to developers, construction-product manufacturers and investors. “Those can take a year to get up and running.”

In a sign demand remains strong, a report yesterday showed sales of new houses advanced in March, capping the best quarter for the industry since 2008. Purchases of new single-family properties climbed 1.5 percent to a 417,000 annual pace, the Commerce Department said.

The Standard & Poor’s Supercomposite Homebuilding Index (S15HOME) jumped 5.6 percent yesterday, the most since July 26.

For more information visit http://www.mortgagessiny.com

Staten Island Mortgage Cash Out/Post-P​urchase Financing

In spite of all the increased regulations and underwriting criteria that require borrowers to actually qualify, mortgage applications are hanging in there quite nicely. Today the MBA reported that last week’s applications were +.2% with purchases and refis both up 0.3%. Conventional refis were off 1% but GNMA refis were up 8.2% – the highest level in 5 weeks. Purchase applications are up 18% from a year ago!

Yesterday’s commentary on home ownership trends attracted a note from Andrew Jakabovics from Enterprise Community Partners. “A quick comment on your history of free and clear ownership – It’s not a surprise that as the homeownership rate rises, the share of owners free and clear will go down, since the new buyers are likely taking out mortgages to buy and will remain indebted for some time to come. There is another phenomenon concurrent with the expansion of subprime and loose lending in the 2000s that also partly explains the ongoing level of indebtedness. Declining rates encouraged refinancing, so borrowers who might otherwise have paid off a high-interest-rate mortgage refinanced into a cheaper product, resetting the amortization clock. Moreover, the 2000s were a period of stagnant to declining wages, and many people who had equity built up in their homes extracted that equity to maintain or upgrade their lifestyles. (Note the interesting contrast to the consumer deleveraging we’re seeing now, which is expected to reduce consumer expenditures, as reported by the NY Fed yesterday”

The housing market may be coming back, but a growing number of policy makers have expressed concerns in recent months that it’s still too hard to get a mortgage. Those in the industry say, “Hey, you can’t have it both ways! Besides, regarding credit, not everyone can or should buy a house.” To absolutely no one’s surprise, the drop in purchase mortgages has been most pronounced among borrowers with low credit scores. Originations have dropped by 30% for borrowers with credit scores above 780 between 2007 and 2012, but they’ve dropped by 90% for borrowers with credit scores between 620 and 680. Some of the decline is probably due to weaker loan demand. So why haven’t mortgage credit standards eased up even a little bit, as they have for other consumer loans such as credit cards and autos? First, home prices have fallen so sharply that lenders are worried future price declines and job losses will leave them with more defaulted mortgages. Also, the Fed’s campaign to push down interest rates means lenders haven’t had to work very hard to drum up business. Together with federal efforts to ease refinancing rules, low rates have produced a surge of refinancing business. This has delivered a steady stream of high-quality, low-risk borrowers in an industry that already has shrunk significantly.

The good news is as mortgage rates rise and refinance demand drops, the capacity constraints on lenders will recede and banks will begin to compete for more of those purchase loans. The upturn in home prices could also boost lenders’ confidence. But the bad news is banks are requiring tighter rules to guard against the risk they’ll have to buy back defaulted loans from GSEs. Second, new federal and state rules associated with handling defaulted mortgages have raised the costs of mortgage servicing. Finally, banks face a series of new federal regulations designed to protect borrowers from receiving unaffordable mortgages, but those rules could also keep credit standards tight if banks decide potential penalties are too onerous.

When I speak with Realtors around different parts of the nation, it seems like some buyers are so desperate to purchase a home they are dispensing with getting a loan and paying cash, just to get their offer accepted. So some lenders are seeing an increasing numbers of “post-purchase financing” where there is “delayed financing” and obtaining a loan after you have purchased a property). Individual company underwriting will vary somewhat, but generally, if the subject property was purchased in the last 6 months measured from the date of purchase to the application date of the new refinance, the loan will be eligible for a Cash Out Refinance transaction provided several requirements are met – and it is important for LOs to set expectations about what is required up front.

The executed HUD-1 Settlement Statement from the purchase transaction must reflect no financing secured by the subject property was used to purchase the subject property. The purchase transaction was an Arms-Length transaction. The source of funds used to purchase the subject property must be fully documented. If funds were borrowed (either unsecured or secured by an asset other than the subject property) to purchase the subject property, those funds must be paid with the cash out proceeds and reflected on the HUD-1 Settlement Sheet for the refinance transaction. If the cash out proceeds do not pay off the borrowed funds, the payments on the balance remaining must be included in the debt to income ratio calculation.

Continuing with some general underwriting criteria for cash out refis, the amount of the cash out refinance loan can be no more than the actual documented amount of the borrower’s initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV/CLTV/HCLTV rations for the transaction. The preliminary title report for the refinance must reflect the borrower(s) as the owner of the subject property and must reflect that there are no liens on the property. And I imagine there are a few others – and don’t forget the cash out pricing!

Yesterday the commentary discussed Realtor & builder relations with lenders. It led to several e-mails about builder programs around the nation. As one example, this one regarding Toll Brothers. “It appears that Toll Brothers does require a full loan application by all of our buyers, however they have the flexibility to use their own lender for the actual loan. A rep, who I assume speaks for the company, sent out, ‘On top of the qualification questionnaire, the buyers must take a full loan application with TBI within 14 days of mutual acceptance. This includes the gathering of W2s, paystubs, etc. Toll requires us to submit their file to underwriting for underwriting approval. Buyers do not have to use TBI but they are required to take a full loan application with TBI (and Toll requires us to get them approved by UW).”

And, “Regarding the paragraph about Credit Union Realtor referral programs – we see these referral programs with many credit unions. How can this NOT be a paid referral fee or kick back from the Realtor and a violation of RESPA? The funny thing is that the member could just ask the Realtor for a rebate directly and receive 100% of it, versus only a cut that the credit union is giving them.”

Those companies involved in “affiliated relationships” are hoping QM’s proposed 3% cap is revised, or at least revised for smaller loans. And that proposal is not stopping companies from forming affiliated relationships: yesterday news broke from Virginia regarding Monarch Mortgage, a division of Monarch Bank and Monarch Financial Holdings, announcing a marketing agreement to provide mortgage banking services for the clients of Rose & Womble Realty Company, and is planning to form a joint venture to support a long-term mortgage partnership. Rose & Womble Realty Company is one of the top residential real estate companies in Hampton Roads, with over 600 local real estate agents and supporting personnel in resale, property management, relocation, new homes and marketing services. Rose & Womble Realty also has other affiliated partnerships in title and settlement, market research, and land planning and development.

And here’s an attention-grabbing headline: “Former Countrywide Executive Returns to Mortgage Bonds – PennyMac, Run by Countrywide’s ex-President, Joins Growing Ranks Issuing Bonds for Nongovernment-Backed Loans.” PennyMac Mortgage Investment Trust announced that its indirect wholly owned subsidiary, PennyMac Corp., plans to make a private offering of $200 million aggregate principal amount of its Exchangeable Senior Notes due 2020 (the “Notes”). “The initial purchasers will have a 30-day option from the date of the offering to purchase up to an additional $30 million aggregate principal amount of Notes from PennyMac Corp…The Notes will be fully and unconditionally guaranteed by PMT and exchangeable for PMT’s common shares of beneficial interest (“Common Shares”)…The Notes will be PennyMac Corp.’s senior unsecured obligations and will rank equally with all of its present and future senior unsecured debt and senior to any future subordinated debt.”

Stearns Lending snagged a top exec from Nationstar Mortgage. Aaron Samples will be running Stearns strategic development which includes its MSR Acquisitions Platform, as well as growing strategic production channels. At Nationstar Mr. Samples was VP of Business Development in its Mortgage Special Servicing group. Congrats on the new gig!

By the way, someone out there is rumored to be doing a large amount of due diligence on iMortgage…

There are two sides to every statistic, but it is hard to find much bad news in the housing market anymore. Yes, prices are increasing, but not everywhere. In some areas sales are down – but that seems to be because folks just aren’t selling. Yesterday the news continued: New Home Sales of single-family properties climbed 1.5% in March, and are 17.6% higher in March than the same period in 2012. The median price of a new home climbed 3% last month from a year ago to $247,000. Purchases increased in two of four regions in March, with a 20.6% gain in the Northeast and a 19.4% advance in the South. Sales decreased 20.9% in the West and 12.1% in the Midwest. And the FHFA House Price Index was up 0.7% in February, and the index was up 7.1% over the last 12 months, and is now 13.6% below its April 2007 peak and is roughly the same as the October 2004 index level.

In the markets, however, there isn’t much to report. As Thomson Reuters reported, “At current market levels, volume has tended to be limited and investors opportunistically supportive within a tight range, and there was no deviation from that today.” Today we had the March Durable Goods number (expected -2.8% versus +5.6% previously, and it came in at -5.7% versus last month’s revised +4.3%) and the Treasury auctions $35 billion 5-year notes at 1PM EST. (There was no earth-shattering news from Asia or Europe overnight.) The 10-yr closed Tuesday with a yield of 1.70% and this morning we’re unchanged at 1.70% and there isn’t much change in agency MBS prices either

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